Eight Percent of Amazon’s Sales Are Coming From Mobile

Online retailers in 2012 were vigilant about making their sites accessible to consumers wherever and whenever they wanted to shop — whether it was on a PC, a phone or a tablet.

Image via mtkang

And while many retailers, especially smaller privately held companies, were bullish on the number of transactions coming from mobile, other larger companies — especially Amazon — have remained mum on the subject.

But in a report today, Citi Analyst Neil Doshi estimates that Amazon is generating $3 billion to $5 billion in annual sales from mobile devices.

If this is the case, the question that has to be answered is, is this significant?

It’s really not.

Take a look at the facts. Based on Amazon’s 2012 revenue forecast, the company’s net sales will total somewhere around $60 billion in 2012, which means that mobile sales will equate to 5 percent to 8 percent of total dollars spent on Amazon.

When asked about his estimate, Doshi called it “conservative,” noting that in 2012, Amazon’s percentage of mobile transactions could be as high as 10 percent. The estimate also takes into account only purchases made on Amazon.com from mobile, and not digital downloads from Kindle devices, for example.

Granted, moving the needle at a company the size of Amazon is extremely difficult, but that’s still comparatively low when looking at others in the space.

Take a look at eBay. It’s anticipating mobile sales to hit $10 billion in 2012, which is at least twice as much as Doshi’s conservative estimate for Amazon. That could equate to nearly 16 percent of eBay’s 2012 revenue — which is double what it was in 2011, and double Amazon’s estimated percentage in 2012.

Doshi provided other comparison points for some of the leading online players: About 15 percent to 25 percent of Google’s search queries are coming from mobile, as are 15 percent to 20 percent of page views on LinkedIn and 40 percent of Walgreens’ online prescription refills.

Amazon is trailing here, but given the Seattle company’s huge investment in mobile, that’s hard to believe.

If Doshi’s estimate took into account digital downloads, the numbers would be a lot higher. Take e-books, for example. It would be logical if a majority of the e-books being purchased are occurring on Amazon’s own Kindle e-readers and tablets.

Additionally, it has invested heavily in building its own app store on Android devices, which sells digital content, such as games. Amazon also has a dozen or more mobile applications available across several platforms, including iOS, Android and its own Kindle devices, which helps consumers shop its homepage in a streamlined fashion.

Since the PR blunder, Amazon has been especially quiet about its mobile successes, so it’s really hard to tell if the 5 percent to 8 percent range is even close to accurate.

But beyond just knowing the percentage of revenue coming from mobile, it’s equally difficult to define success. As Doshi points out, it’s hard to know whether mobile results in incremental revenue, or if it is cannibalizing purchases that would have otherwise occurred online.

He writes:

[T]here has been a relatively healthy debate around the extent of Mobile Internet usage that’s really incremental, and accordingly the extent of monetization opportunities that are completely incremental (and do not cannibalize traditional desktop / PC Internet usage).

Doshi adds that people tend to use phones while they are out during the day and tablet usage spikes from 7 to 10 pm when they are on the couch — in other words, mobile usage is occurring when they aren’t in front of a PC and therefore could be incremental.

In all, Doshi believes Amazon and eBay are “likely to benefit from increased sales activity from mobile devices.”

That’s obvious. After all, purchases made on the PC and mobile monetize the same. However, that’s not the case for content companies, which find it much harder to generate revenue from advertising on the smaller screens.

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